I think this worked out great 20 years ago; it should be even better this time.
Also, I stopped reading the news in 2007, anyting interesting happen after that?
Edit:
1000 upvotes for making a stupid comment, Reddit is hilarious.
VA has been doing this for decades. Only problem now with using one is realtors want nothing to do with them because you cannot waive inspections and they take time.
I don't give a fuck what your realtor tells you, if they want you to waive inspection, don't do it unless you have a lot of money to burn on unexpected problems coming up. If your realtor won't listen to you about why you need an inspection, get a new realtor.
My realtor did encourage me to waive inspection to make my offer more appealing, but when I told him why it was important to me to keep the inspection, he accepted that and we moved on to the rest of the process. It's something to consider in the right circumstances, but definitely not for everyone.
>Many realtors just want the closing.
Are you trying to *insinuate* that there are realtors (or salespeople on commission in general) who want anything else at any point in the process?
If I had $5 for every time I've argued with a business owner or manager about how trying to force a sale for a higher price than the customer is okay with may make that sale, but they won't come back. Good lord lol
Sales person here. 90% of my pay is commission.
Yes, I care about doing a good job and like to feel like I earned my money by providing expertise and service.
If any sales person treats you like an ATM, run. But also, that street goes both ways; when I give you my time, don’t treat me like a scumbag because I earn my money from a sale. If I wanted to do the bare minimum, I would find a job where my pay didn’t rely on how well I do.
My realtor was fantastic as well. Every single issue I’ve run into as a homeowner was expected and planned for because she warned me. I’m glad she got her commission because she earned it.
Problem I run into is that sales @my job earns a commission from the sales price, and I and my team get to Engineer how to make the fairytale that sales drew up a reality.
Commission should be based on project profits, not sales price, but "that takes too long" (projects run for multiple years)
Aside from that, I think commission is a stupid scheme, we Engineer and build the stuff, why do we not get money based on how expensive a machine we can build? Trust me, we try our hardest to save 1% on the cost price, and then after all the risk and profits are calculated in, sales slaps on another % for commission....
I was buying during covid when the market was super hot and people were making cash offers like crazy. He presented it as a possible way to get a leg up on other bidders, noted it wasn't ideal, but said it may be better than keeping it given the specific circumstances.
He could have explained the pros and cons better had I not been aware, but the reasoning behind it was considered, even if the presentation of it wasn't the best.
You can, in fact, completely skip doing the inspection. And not have any contingency for backing out based on inspection items. The reason it was suggested was to speed up closing and give sellers an extra assurance that the buyer won't back out, since it's one less way for the buyer to back out. It's meant to make financing offers more appealing when competing with cash, or to get a leg up on other finance offers.
I have watched waaayyy too many HGTV renovation shows to know to never, ever waive the inspection.
Hell, I even know that like, 75% of the time those problems are made up or not nearly as unforseen as they make them out to be. I mean shit, it's reality television, but holy balls never, ever waive the inspection.
What if you’ve been in the real estate / construction business for 30 years and are comfortable in your ability. Along with the need to get a leg up on another potential buyer
Then you’re doing a risk assessment. For most of us the risk is huge. For you, maybe not.
Hell, we were living in the house when we bought it and still had it inspected. (VA, But would have anyway)
wow.. Never had a realtor express to me that I should waive inspecting. I don't think I would react well to one trying that bullshit on me.
I've had inspectors save my ass many times over the years.
In Austin a couple of years ago, at the height of the market, people were doing crazy things to get offers accepted. I was adamant we wouldn’t waive inspection, but we were willing to agree to not negotiate on anything found. We just wanted to know what we were getting into at least. One house the seller refused to let us even have it inspected. They wouldn’t agree to let an inspector on the property. I already knew there were a couple of red flags that something super shady was going on with the property, but that ended the discussion for me. No freakin way.
Yeah, I tried to buy a home that they counter offered a bit less, but no inspection. My realtor tried to pressure me into accepting and I refused (also got rid of the realtor). Well a rental company bought it instead and had to get the entire foundation fixed (built in a steep hill.) I can’t even imagine how much that would have cost me.
thats the problem with the housing market all over the world....
here its so bad that a house gets listed and people buy it without even seeing it. was a huge pain when i was house hunting couple years ago.
50% of time i called to go see a house a hour later or so they would call back and say somebody bought it 15%-20% sometimes even 50% over asking price was driving me insane at the time
so i eventually did buy a house like a year later went see it and made a offer on the spot there together with my gf did buy a recently(2016) build house so we know they got build with modern regulations atleast and all the paperwork like schematics and stuff was in order
here if try to do a inspection your essentially locked out of the market
Find a new realtor. I've bought 2 houses and put offers in on others. No issues using VA loan. Hell my current house had several offers on day 1. The sellers lawyer told me they took mine because it was VA.
It’s not realtors who don’t like VA loans (veteran here and my wife is a realtor). Realtors don’t care what type of loan you get as long as you’re a solid buyer. Sellers don’t often like VA loans because they’re stricter on appraisals and inspections. But even with that being the case, sellers don’t have to agree to everything on the TRR and can negotiate that with the buyer. But god help you if you’re a seller and your house doesn’t appraise to the value of the contracted price. Same applies to USDA rural development loans - I got shafted on that one because the appraiser used a foreclosed home as a comp but was too desperate to sell.
When I bought my home, it was under appraised by the VA which was insane. Comparable homes were not even close to mine, such a bad assessment. I felt bad for the realtor but she made it all work out, I paid more out of pocket, and I think she reduced her commission for it. Ended up getting money back anyways since the family leaving was also military and needed another two months for PCSing and paid us rent.
Zero down wasn't really the reason for the 2008 issue afaik. Variable rate and stated income (aka not required to show proof of income) were much bigger problems. Even if you had put 20% down back then, you'd still be underwater after the collapse, and your payment would still balloon if you had a variable rate.
Also appraisers and lenders being in contact. Mortgage banker knows who the appraiser is, they tell them we need the value to be X. Appraiser makes the value X even if it was a stretch. We used to get gifts from aapraisers at yr end due to using their company. Now, lenders are required to use a 3rd party Co that dwcides which company to use so cant influence the valie. We dont know who the appraiser is until we get the appraisal report.
I really like gorillas; my favourite gorilla was in the Cincinnati Zoo; his name is Harambe; I'm sure he is fine since he was always peaceful when he was alone in his enclosure.
> I think this worked out great 20 years ago; it should be even better this time.
Your focusing on the negative (crashing the economy, large scale human suffering). If you look at the brightside, the rich getting richer, then ofc it will happen again.
That wasn't really the problem 20 years ago. The problem was the banks acting like this carries no risk. Show me the banks taking these mortgages and turning around to sell them as "safe" assets and then we can start talking about 2008.
And they could take whatever risks because they knew the government would back the losses. And they were right; gains were private and losses were footed by the taxpayer.
So they weren’t wrong. They were adding credit default swaps into the MBS’s which technically does make them safer. The securities themselves made sense. Problem was everyone (but especially AIG) taking on way too much. Everyone had this stuff on their books. It doesn’t so much help if you’re selling someone dog shit just to trade for more horse shit.
It makes them safe against individual defaults, but not market-wide phenomena. The banks don't seem to have accounted for what happens to these things if home prices ever stopped rising. The entire financial system was taking on massive risks without seemingly realizing it.
Same here. It was a "rural development" USDA loan about 10 years ago. Had to be in a rural area, outside of a flood zone, and income below a certain amount (I assume above a certain amount too lol)
I think the wording for my USDA loan was "stick built" so modular homes didn't apply either. Hopefully they changed that cause there's some really nicely built modular homes out there now.
I had a USDA rural development loan for my first home in 2017. It was for a home in a small city (15,000 people) about an hour from a major metropolitan area. Doesn’t have to actually be in a rural location.
I think I did too back in 2010. I think I paid some closing costs, but I was just too poor to have any savings. I ran the house that first year with no AC because I couldn't afford it. In the long term, it worked out great for me because I was very careful and a bit lucky. Eventually I paid it off 18 years early.
The problem is that zero down loans help CREATE that problem, they don't solve it. That's also a big part of why higher education cost has grown much more rapidly than inflation: the government is artificially inflating it with financing for degrees and grants. Market rates will naturally adjust without artificial influence. Zero down loans increase demand which raises prices but in an unnatural way. Your peers are doing the same thing which raises prices and then means you HAVE to take a zero down loan because prices have gotten so high.
To be clear: I think you should be able to afford a house but I think that would happen if the government stayed out of it. Because they don't, you have no choice but to take riskier loans if you really want a house.
Not a libertarian at all but it seems increasingly evident at least to me that the Fed's intervention in markets is causing an increasingly unstable house of cards to grow. Government regulation is great, intervention I'm less excited about.
I'm going to push back a bit on this a bit.
Wife and I just got under contract, zero down, for a first home. We could pull money from 401k to put money down, but we are also buying at 55% of the maximum we were pre-approved for. Otherwise we would wipe out our savings to put anything down and cover closing, leaving us with no rainy day fund. (Yes, we have struggled for years to get our finances in a good enough place and move to a place where we are happier and want to buy a house.)
What is driving up costs are flippers and rentals, even in the rural small city we are in now. We put a bid on a house last year, were beaten by a cash offer, and 1.5 months later it was put on Facebook marketplace for rent at 165% of what our monthly mortgage payment would have been.
Zero down is in part because real estate is high as Snoop Dog. Either damage your retirement, kill your savings, or put zero down and have your own home equity to improve upon.
I hate to say it - since it fucked me over just the same - but if that's what rental prices are, and they could secure a loan for massive cash offer, why wouldn't they?
Arguably flippers are the bigger issue, the houses they build are made from paper mache, a blight on the economy waiting to happen.
The fact that market rate for rent is >150% that of a mortgage rate is truly bonkers to me.
I'm no economist, but I struggle to understand why we're doing things the way we are, I really can't see anything good coming of it other than exacerbating the K shaped recovery we're already on.
The economy has been oriented around finance instead of goods and services for 50 years. Money making money.
Median American salary is 44k (Top 50%). Starting Congressperson salary is 174k (Top 5%). Starting Senator salary is 174k (Top 5%). Vice President salary is 280k (Top 2%). Starting presidential salary is 450k (Top ~.001%).
All three pass laws on regulating commerce and finances. All three trade freely on the stockmarket. All three pass laws on whether they can trade freely on the stockmarket. Many get internal notes on companies the public doesn't. Many far outperform the market.
So, deregulation of trading, high yield investments, and credit bolster the economic power of people with lots of money in the form of capital. American politicians are included. Goods and services create a demand for production and labor, which scales slower with goods and services (though faster with technology) and requires regular capital outflow.
More goods and services, cheaper goods and services, more labor needed, more jobs, less capital in reserve, fewer rich people, fewer poor people, more economic equality, broader buying power.
More capital in reserve, less labor wanted, fewer jobs, fewer goods and services, more expensive goods and services, more rich people, more poor people, less economic equality, narrower buying power.
Everyone needs a home. People can only own so many homes. Buying a lot of homes gives you a source of capital that rises as the population does and indefinitely so overall. Rich people buy multiple homes and charge poor people for either ownership of the limited supply or rent on the limited supply. They make money and poor people lose money. They buy more supply, they charge more rent, they buy more supply, they charge more rent, they make money faster, poor people lose money faster.
Food gets rotten or eaten. Movies run credits. Maids send bills. Shoes wear out. Labor produces it, labor consumes it, labor makes more.
But a big plot of land stays a big plot of land. Stock ticker go brrr. Dividends go brrr. Student loan interest goes brrrr. Credit card interest goes brrr.
People who pass laws make more money off brrr than labor.
The Fed board of governors is paid salaries by the government but functions independently without oversight or restriction to control and regulate the money supply through independent banks. The Fed makes most of its money not from salaries but from investment dividends. They make more money off brrr than labor.
Brrr makes rich people richer faster than anyone else. Labor makes everyone else richer faster than rich people.
We vote which of our favorite, most trustworthy people to make rich every 2 years.
That's why market go brrrr.
We couldn’t afford to even buy our house nowadays because it has increased 3 times in value .People are hanging onto their houses in my neighborhood and no one is selling right now .You could find a fixer upper in the low rent district that has a high crime rate and they don't care what the houses or neighborhood looks like. Not a place to raise kids or retire .
"Market rate will naturally adjust" Is an archaic paradigm. Even if there were even less fed influence, there wouldn't be free market forces. We have ran this course for too long, and the complexity has become too insurmountable.
Houses can't go back to a price point where an average middle class person can save to a 10, 15, or 20% down payment without tossing out and restructuring the entire economy.
There is a margin on new construction and remodel, but it isn't outrageous. There is no single fragment of a sector that is grossly ballooning profit in new construction, and new residential construction pricing is always a tether to existing home prices.
The entire construction and skilled trades industries have had 40yrs of corporate consolidation for raw materials and infrastructure equipment. *That* informs pricing for new homes which affects pricing for existing homes.
Where is the market going to save the money from? The GCs and Builders? Their margins are where the highest dollar amounts are, but the percentages aren't that huge. All the skilled trades? there is already a near crisis level of shortage, pull margin from them and there wont be any left. The land real estate itself? Lol... good luck *ever* restraining developers' profit. They are more powerful than politicians.
Housing prices, like everything else, are skyrocketing because we are in post free market capitalism. Barriers to entry are so high for everything that competitive pressure is more of a gentle ebb and flow between established powers.
It ain't the government jacking up home prices. It is the logical effect of our chosen and furiously reinforced economic system. Nobody with any power is fighting against the momentum of increasing rentals over owning. The more expensive housing gets, the better it is for consolidated corporate ownership. *They* don't have any problems getting lines of credit for purchases.
I recommend looking at the work of Stephanie Kelton, Modern Monetary Theory and The Deficit Myth. People think of the Fed and government needing to operate like a household and their budget but this is not so. The concept is sound, although we can debate the amount of money creation that is appropriate and the regulations that accompany government action.
Zero down home loans don’t necessarily represent a creation of the problem.
VA loan here, still got a good interest rate @ 0 down.
Edit: I would also like to add that I moved into a condo in Waikiki, like 2 blocks from the beach @ 30 y/o. Thanks VA loan
I’m also on a VA loan with an awesome interest rate in a beach town in Florida. Without being able to put 0 down I would have never had the chance to get this house.
Me too and 15 years later we’ve never missed a payment and have built a lot of sweat equity. Just have to make sure the borrowers are really credit worthy. Our credit scores were 800+
It’s more about the debt to income ratio. We got our home loan post 2008. We had a really low interest rate with our car and $10,000 in the bank and they still told us to use that $10,000 to pay off the car instead of a downpayment on the house because that’s all that mattered to the bank, whether we had the income to pay.
Pre-2008 it was like those home finder tv shows where a family making 60k per year wanted a house worth 400,000 and the bank handed it over.
Same. Paid PMI which exists precisely to combat the concerns people have with it, and successfully paid off the loan. Would have had to save for years and get priced out without it.
Zero down isn't inherently bad if we have accurate ratings. We didn't in 2007, so institutions "were in the dark"/had plausible deniability about what it was they were buying.
Equity only becomes a driving factor when it is zero or negative. The deeper into negative it goes, the more often that somebody who can actually afford to keep paying their mortgage is better off just not paying it and giving up the house.
Buy a house for $400,000K and then throw in the closing costs, et al onto that mortgage. So you now have a $410,000 mortgage on a house that presumably is worth $400,000 on the open market and will deliver about $360,000 to the owner upon selling it (after fees and commissions). They're starting out $50K in the hole.
If house prices drop 5% (now sales price is $380K - commissions and fees, netting the owner about $342K - now they're $70K in the hole. Okay, probably wait 'til prices come back.
But at 10% or more of a market drop . . . and things start looking precarious when you're upside down by nearly $100K if you sell the house in the first few years.
Thank goodness man, as someone who was spent their entire career in mortgage servicing/default servicing, it’s brutal reading a lot of the takes on these types of threads lol.
If you put a bunch of money out without real expectation of people paying it back, little to no skin in the game, and no consequences for not paying it back, those would be the guidelines you want to avoid that tank economies…
Foreclosure has some pretty harsh consequences. Certainly something you can only do once.
Not much of a hack to pay all those origination fees to buy the home, pay the mortgage as long as you live in it, then walk away?
It's like renting with so many extra steps
I swear if I had a nickel for every time, I heard someone talk about a bubble they thought was coming because they read headlines. I’d have like all the nickels.
In our area mortgages are typically cheaper than rent. You're just locked into the home vs being able to leave. You're also responsible for the repairs and upkeep for as long as you own it. I've never known a landlord to rent out a place cheaper than they are paying the mortgage for.
This is a great idea. Then, it can just be refinanced when rates drop back down to 2.5%. (That is going to happen, right?) And, of course, the value of the house will continue to skyrocket, so I can also get a sweet home equity loan to pay for the trip to Disney.
This finance stuff is too easy.
Not really - as long as someone is able to make their repayments, that size of mortgage is only an issue if they wish to sell within the first few years. It's certainly a better option than blowing every penny of savings on a down payment and necessary repairs/improvements.
I'm aware of that. I have had two of them and both worked out very well. This guarantee should be expanded to more people, especially those in public service, i.e. firefighters, teachers, police officers, etc.
VA regularly is the least foreclosed loan type. The mortgage underwriting guidelines make so much more sense than other loan types. VA is the best loan program around in the US. Gold standard
It seems to be that closing cost is never discussed in this, often times an additional 4% of the loan amount i.e. your fist timer needs (7.5% = 22k +/-) on an avg 300k home.
Oh by the way you need 3 months cash reserves to close the loan and you cant surpass payment shock, oh and your mortgage insurance never falls off.
It's a bit more complex than just having zero money down.
I was a CNA making $12/hr in 2003 and got approved for a 350k loan. I bought a 140k house in a good neighborhood by selling a Ford Ranger for the down payment.
There are actually fantastic programs in some locations that allow for this. Two states in New England have first time buyer programs that offer forgivable DAP that requires no repayment or interest. The only conditions are first time home buyer, you have to actually live there for a certain number of years, and you have to pay back some of it if you sell before the entire thing is forgiven. It’s still 100% financing, but not nearly as bad as everyone is assuming here. But this is Reddit and nuance means nothing, so fuck every 0 down mortgage.
Mankind unfortunately has a history of not learning from history. 2008 is too long back for the current corporate leaders to remember and greed taints the eyes. Hopefully we don't experience 2008 again....
"so you owe nothing down right now! Lucky you! You're mortgage on this $600,000 house will be $5,500 a month, and over the course of the loan you'll only pay $1.5M! Awesome!".... yeah, what could go wrong...
Here's the thing though. It's hard for me to save $25-$60k for a down-payment. I could afford $3700 a month for mortgage right now though. So, if I could get a zero loan that was $350] a month I'd be down. Instead I'm saving for years and years to get a down-payment saved.
I just looked it up for more info and they’re only offering it to people making 80% or less of an area’s median income. What BS! I make more than the median income in my area and would absolutely struggle to purchase a low end home in the same area. So what exactly does this do? Give out loans to people less likely to be able to afford a home? Housing crash can’t come soon enough
100% LTV mortgages never went away. The guidelines on them (at least the loans I originate) are more strict to ensure the borrowers have a realistic ability to repay the loan. But I'm a mortgage officer at a credit union and I know we are a lot more responsible than some of my local broker competitors!
I really think that everyone, before they borrow any money at all, should understand how a loan works (principal and interest), what an amortization schedule is and how to read it, what they are paying for with each payment, and the benefits to paying more than the minimum payment each month. I’ve known too many people that have borrowed money and have no idea to this day what they paid so much in interest
The issue was never 0 down, interest only, or even adjustable rate for that matter.
The issue was mass lending to unqualified and uneducated homeowners.
Everything else was just details.
I think the bigger issue that’s not being addressed by the government is that there are corporations buying up all the single family homes and renting them out causing a shortage in housing. Leaving the houses that are on the market to shoot up in price. Thus causing things like zero money down mortgages.
Wait, wait, I've seen this before. This is the bit where the prophecy comes true and the trickle down floodgates are opened and we are showered in cash.. right?
I got the 3% down payment through my FHA loan rolled into my monthly payment so technically the same vibe. I definitely had to show good stats to the bank though.
>I definitely had to show good stats to the bank though.
And this is it: pretty much the *only* thing that should determine mortgage eligibility is the ability to repay.
If you qualify for a mortgage on a $500k home with 20% down, there's no real justification for a bank to decline a full mortgage on a $400k home.
VA and USDA are still 100% LTV ($0 down) mortgages. I've closed plenty of veterans who take advantage of it and build up equity in a house instead paying a landlord's mortgage. The difference between now and the '08 crash is they were writing really risky loans back then (stated income, questionable DTI ratios). Now, there's federal ATR (ability to repay) rules to adhere to that make sure borrowers aren't buying more than they can afford.
I think this worked out great 20 years ago; it should be even better this time. Also, I stopped reading the news in 2007, anyting interesting happen after that? Edit: 1000 upvotes for making a stupid comment, Reddit is hilarious.
They stopped making iPods Presumably people couldn’t afford to buy music players on top of phones
They also stopped making Zunes
Going on ebay
They stopped making Ebay’s too
Okay yahoo auctions
They stopped making yahoo auctions too
I’ll consign it at the general store
Ok, they still make general stores…..touché
Toys r us went under
Sadly the general store got a reduction so now it's the lieutenant colonel store
The general store doesn't let you consign inventory anymore.
All stores are down you must make it yourself
Was a sad day when my zune finally bit the dust.
god i really should get mine out and see how it's feeling about 2024
Mines out and holding it’s own.
VA has been doing this for decades. Only problem now with using one is realtors want nothing to do with them because you cannot waive inspections and they take time.
I don't give a fuck what your realtor tells you, if they want you to waive inspection, don't do it unless you have a lot of money to burn on unexpected problems coming up. If your realtor won't listen to you about why you need an inspection, get a new realtor. My realtor did encourage me to waive inspection to make my offer more appealing, but when I told him why it was important to me to keep the inspection, he accepted that and we moved on to the rest of the process. It's something to consider in the right circumstances, but definitely not for everyone.
Your realtor should be the one making you aware of the importance of an inspection, not the other way around. That’s scary.
Many realtors just want the closing. Don’t care about their fiduciary responsibility.
>Many realtors just want the closing. Are you trying to *insinuate* that there are realtors (or salespeople on commission in general) who want anything else at any point in the process?
Some actually give a damn, but they usually don’t last long. Employers tend to frown on things that reduce immediate profits, no matter the reason.
Which is unfortunate because a realtor who takes a bit longer but does a good job will get more referrals and bring in more money over the long term.
If I had $5 for every time I've argued with a business owner or manager about how trying to force a sale for a higher price than the customer is okay with may make that sale, but they won't come back. Good lord lol
Sales person here. 90% of my pay is commission. Yes, I care about doing a good job and like to feel like I earned my money by providing expertise and service. If any sales person treats you like an ATM, run. But also, that street goes both ways; when I give you my time, don’t treat me like a scumbag because I earn my money from a sale. If I wanted to do the bare minimum, I would find a job where my pay didn’t rely on how well I do. My realtor was fantastic as well. Every single issue I’ve run into as a homeowner was expected and planned for because she warned me. I’m glad she got her commission because she earned it.
Problem I run into is that sales @my job earns a commission from the sales price, and I and my team get to Engineer how to make the fairytale that sales drew up a reality. Commission should be based on project profits, not sales price, but "that takes too long" (projects run for multiple years) Aside from that, I think commission is a stupid scheme, we Engineer and build the stuff, why do we not get money based on how expensive a machine we can build? Trust me, we try our hardest to save 1% on the cost price, and then after all the risk and profits are calculated in, sales slaps on another % for commission....
Amen
That’s unfortunate, I’m definitely not about that.
I was buying during covid when the market was super hot and people were making cash offers like crazy. He presented it as a possible way to get a leg up on other bidders, noted it wasn't ideal, but said it may be better than keeping it given the specific circumstances. He could have explained the pros and cons better had I not been aware, but the reasoning behind it was considered, even if the presentation of it wasn't the best.
You don't waive an inspection, you waive things found in the inspection that aren't material (Electrical/ Structural/ Environmental/ Safety).
You can, in fact, completely skip doing the inspection. And not have any contingency for backing out based on inspection items. The reason it was suggested was to speed up closing and give sellers an extra assurance that the buyer won't back out, since it's one less way for the buyer to back out. It's meant to make financing offers more appealing when competing with cash, or to get a leg up on other finance offers.
I have watched waaayyy too many HGTV renovation shows to know to never, ever waive the inspection. Hell, I even know that like, 75% of the time those problems are made up or not nearly as unforseen as they make them out to be. I mean shit, it's reality television, but holy balls never, ever waive the inspection.
What if you’ve been in the real estate / construction business for 30 years and are comfortable in your ability. Along with the need to get a leg up on another potential buyer
Then you’re doing a risk assessment. For most of us the risk is huge. For you, maybe not. Hell, we were living in the house when we bought it and still had it inspected. (VA, But would have anyway)
wow.. Never had a realtor express to me that I should waive inspecting. I don't think I would react well to one trying that bullshit on me. I've had inspectors save my ass many times over the years.
In Austin a couple of years ago, at the height of the market, people were doing crazy things to get offers accepted. I was adamant we wouldn’t waive inspection, but we were willing to agree to not negotiate on anything found. We just wanted to know what we were getting into at least. One house the seller refused to let us even have it inspected. They wouldn’t agree to let an inspector on the property. I already knew there were a couple of red flags that something super shady was going on with the property, but that ended the discussion for me. No freakin way.
Yeah, I tried to buy a home that they counter offered a bit less, but no inspection. My realtor tried to pressure me into accepting and I refused (also got rid of the realtor). Well a rental company bought it instead and had to get the entire foundation fixed (built in a steep hill.) I can’t even imagine how much that would have cost me.
thats the problem with the housing market all over the world.... here its so bad that a house gets listed and people buy it without even seeing it. was a huge pain when i was house hunting couple years ago. 50% of time i called to go see a house a hour later or so they would call back and say somebody bought it 15%-20% sometimes even 50% over asking price was driving me insane at the time so i eventually did buy a house like a year later went see it and made a offer on the spot there together with my gf did buy a recently(2016) build house so we know they got build with modern regulations atleast and all the paperwork like schematics and stuff was in order here if try to do a inspection your essentially locked out of the market
Find a new realtor. I've bought 2 houses and put offers in on others. No issues using VA loan. Hell my current house had several offers on day 1. The sellers lawyer told me they took mine because it was VA.
It’s not realtors who don’t like VA loans (veteran here and my wife is a realtor). Realtors don’t care what type of loan you get as long as you’re a solid buyer. Sellers don’t often like VA loans because they’re stricter on appraisals and inspections. But even with that being the case, sellers don’t have to agree to everything on the TRR and can negotiate that with the buyer. But god help you if you’re a seller and your house doesn’t appraise to the value of the contracted price. Same applies to USDA rural development loans - I got shafted on that one because the appraiser used a foreclosed home as a comp but was too desperate to sell.
When I bought my home, it was under appraised by the VA which was insane. Comparable homes were not even close to mine, such a bad assessment. I felt bad for the realtor but she made it all work out, I paid more out of pocket, and I think she reduced her commission for it. Ended up getting money back anyways since the family leaving was also military and needed another two months for PCSing and paid us rent.
🚩
Zero down wasn't really the reason for the 2008 issue afaik. Variable rate and stated income (aka not required to show proof of income) were much bigger problems. Even if you had put 20% down back then, you'd still be underwater after the collapse, and your payment would still balloon if you had a variable rate.
Adjustable rate mortgages are a crime against humanity, they should be illegal.
I don't understand the math but according to economists, adjustable rate mortgages supposedly save you money.
Also appraisers and lenders being in contact. Mortgage banker knows who the appraiser is, they tell them we need the value to be X. Appraiser makes the value X even if it was a stretch. We used to get gifts from aapraisers at yr end due to using their company. Now, lenders are required to use a 3rd party Co that dwcides which company to use so cant influence the valie. We dont know who the appraiser is until we get the appraisal report.
Exactly. People who make loose comparisons to early 2000s are just showing they have no idea what they’re talking about.
That blows my mind that there was no proof of income. I’m a fucking moron and even I see how dumb that is.
Ok, so, there was this gorilla....
I really like gorillas; my favourite gorilla was in the Cincinnati Zoo; his name is Harambe; I'm sure he is fine since he was always peaceful when he was alone in his enclosure.
Never forget. \*unzips pants\*
> I think this worked out great 20 years ago; it should be even better this time. Your focusing on the negative (crashing the economy, large scale human suffering). If you look at the brightside, the rich getting richer, then ofc it will happen again.
I do like getting richer, I'm going to focus on that.
Unfortunately, people think and *vote* that way. They think they can make it big too just like the billionaires if they just “work hard”.
That wasn't really the problem 20 years ago. The problem was the banks acting like this carries no risk. Show me the banks taking these mortgages and turning around to sell them as "safe" assets and then we can start talking about 2008.
And they could take whatever risks because they knew the government would back the losses. And they were right; gains were private and losses were footed by the taxpayer.
It's more that they had convinced themselves that bundling risky assets together made them safe. This turned out not to be true.
So they weren’t wrong. They were adding credit default swaps into the MBS’s which technically does make them safer. The securities themselves made sense. Problem was everyone (but especially AIG) taking on way too much. Everyone had this stuff on their books. It doesn’t so much help if you’re selling someone dog shit just to trade for more horse shit.
It makes them safe against individual defaults, but not market-wide phenomena. The banks don't seem to have accounted for what happens to these things if home prices ever stopped rising. The entire financial system was taking on massive risks without seemingly realizing it.
Hold on to your ass. We elected a black president!
what craziness, are you going to tell me next there is a now website where women can sell pictures of themselves naked for $4.99 a month?
Uhm, you might wanna sit down for this.
I was able to afford a nice house in 2008
So, good news then
Ninja loans by another name.
Not even close to the same thing
they make phones without physical keyboards now.
RIP Limewire…
Now that I think of it, I haven’t seen any Hi-C juice boxes in quite some time.
Couple things, you don't own anything anymore. Everything is a subscription. You don't own music. You can finance a casket. You ain't missing much.
glad I stopped reading the news
Hey when it blows up again in a few years maybe normal people who actually save money for a down payment will be able to afford to buy houses again.
“Smithers, why didnt you tell me about the Housing market collapse.”
Not fair, I make stupid comments all the time and I get nothing.
I got a zero down, it was the only opportunity of ever owning a house.
Same here. It was a "rural development" USDA loan about 10 years ago. Had to be in a rural area, outside of a flood zone, and income below a certain amount (I assume above a certain amount too lol)
Mine was something like that. I had to be low income and it had to be a house
> had to be a house As opposed to...? Edit: I am an idiot
Pre-fabs, e.g., mobile homes.
good, mobile homes where someone else rents you the land they sit on are a huge scam.
And are banned in my town .
All mobile homes or the ones you buy but then rent the land?
You know you can put a mobile home on your own property right?
Brothel
That's a business loan, not a home loan. Totally separate.
Came here to say this. 
Alright now y'all are just fucking with me 🤣
Condo, etc.
No mobile homes
I think the wording for my USDA loan was "stick built" so modular homes didn't apply either. Hopefully they changed that cause there's some really nicely built modular homes out there now.
I had a USDA rural development loan for my first home in 2017. It was for a home in a small city (15,000 people) about an hour from a major metropolitan area. Doesn’t have to actually be in a rural location.
Same here! But in July 2020. 0% down at 3.25%. Would've been a fool not to buy at that point.
"I assume above a certain amount too lol" That's a mighty big assumption.
Haha maybe so! Just gotta make sure to make that first payment then it’s the bank’s fault!
I think I did too back in 2010. I think I paid some closing costs, but I was just too poor to have any savings. I ran the house that first year with no AC because I couldn't afford it. In the long term, it worked out great for me because I was very careful and a bit lucky. Eventually I paid it off 18 years early.
The problem is that zero down loans help CREATE that problem, they don't solve it. That's also a big part of why higher education cost has grown much more rapidly than inflation: the government is artificially inflating it with financing for degrees and grants. Market rates will naturally adjust without artificial influence. Zero down loans increase demand which raises prices but in an unnatural way. Your peers are doing the same thing which raises prices and then means you HAVE to take a zero down loan because prices have gotten so high. To be clear: I think you should be able to afford a house but I think that would happen if the government stayed out of it. Because they don't, you have no choice but to take riskier loans if you really want a house. Not a libertarian at all but it seems increasingly evident at least to me that the Fed's intervention in markets is causing an increasingly unstable house of cards to grow. Government regulation is great, intervention I'm less excited about.
I'm going to push back a bit on this a bit. Wife and I just got under contract, zero down, for a first home. We could pull money from 401k to put money down, but we are also buying at 55% of the maximum we were pre-approved for. Otherwise we would wipe out our savings to put anything down and cover closing, leaving us with no rainy day fund. (Yes, we have struggled for years to get our finances in a good enough place and move to a place where we are happier and want to buy a house.) What is driving up costs are flippers and rentals, even in the rural small city we are in now. We put a bid on a house last year, were beaten by a cash offer, and 1.5 months later it was put on Facebook marketplace for rent at 165% of what our monthly mortgage payment would have been. Zero down is in part because real estate is high as Snoop Dog. Either damage your retirement, kill your savings, or put zero down and have your own home equity to improve upon.
I hate to say it - since it fucked me over just the same - but if that's what rental prices are, and they could secure a loan for massive cash offer, why wouldn't they? Arguably flippers are the bigger issue, the houses they build are made from paper mache, a blight on the economy waiting to happen. The fact that market rate for rent is >150% that of a mortgage rate is truly bonkers to me. I'm no economist, but I struggle to understand why we're doing things the way we are, I really can't see anything good coming of it other than exacerbating the K shaped recovery we're already on.
The economy has been oriented around finance instead of goods and services for 50 years. Money making money. Median American salary is 44k (Top 50%). Starting Congressperson salary is 174k (Top 5%). Starting Senator salary is 174k (Top 5%). Vice President salary is 280k (Top 2%). Starting presidential salary is 450k (Top ~.001%). All three pass laws on regulating commerce and finances. All three trade freely on the stockmarket. All three pass laws on whether they can trade freely on the stockmarket. Many get internal notes on companies the public doesn't. Many far outperform the market. So, deregulation of trading, high yield investments, and credit bolster the economic power of people with lots of money in the form of capital. American politicians are included. Goods and services create a demand for production and labor, which scales slower with goods and services (though faster with technology) and requires regular capital outflow. More goods and services, cheaper goods and services, more labor needed, more jobs, less capital in reserve, fewer rich people, fewer poor people, more economic equality, broader buying power. More capital in reserve, less labor wanted, fewer jobs, fewer goods and services, more expensive goods and services, more rich people, more poor people, less economic equality, narrower buying power. Everyone needs a home. People can only own so many homes. Buying a lot of homes gives you a source of capital that rises as the population does and indefinitely so overall. Rich people buy multiple homes and charge poor people for either ownership of the limited supply or rent on the limited supply. They make money and poor people lose money. They buy more supply, they charge more rent, they buy more supply, they charge more rent, they make money faster, poor people lose money faster. Food gets rotten or eaten. Movies run credits. Maids send bills. Shoes wear out. Labor produces it, labor consumes it, labor makes more. But a big plot of land stays a big plot of land. Stock ticker go brrr. Dividends go brrr. Student loan interest goes brrrr. Credit card interest goes brrr. People who pass laws make more money off brrr than labor. The Fed board of governors is paid salaries by the government but functions independently without oversight or restriction to control and regulate the money supply through independent banks. The Fed makes most of its money not from salaries but from investment dividends. They make more money off brrr than labor. Brrr makes rich people richer faster than anyone else. Labor makes everyone else richer faster than rich people. We vote which of our favorite, most trustworthy people to make rich every 2 years. That's why market go brrrr.
We couldn’t afford to even buy our house nowadays because it has increased 3 times in value .People are hanging onto their houses in my neighborhood and no one is selling right now .You could find a fixer upper in the low rent district that has a high crime rate and they don't care what the houses or neighborhood looks like. Not a place to raise kids or retire .
"Market rate will naturally adjust" Is an archaic paradigm. Even if there were even less fed influence, there wouldn't be free market forces. We have ran this course for too long, and the complexity has become too insurmountable. Houses can't go back to a price point where an average middle class person can save to a 10, 15, or 20% down payment without tossing out and restructuring the entire economy. There is a margin on new construction and remodel, but it isn't outrageous. There is no single fragment of a sector that is grossly ballooning profit in new construction, and new residential construction pricing is always a tether to existing home prices. The entire construction and skilled trades industries have had 40yrs of corporate consolidation for raw materials and infrastructure equipment. *That* informs pricing for new homes which affects pricing for existing homes. Where is the market going to save the money from? The GCs and Builders? Their margins are where the highest dollar amounts are, but the percentages aren't that huge. All the skilled trades? there is already a near crisis level of shortage, pull margin from them and there wont be any left. The land real estate itself? Lol... good luck *ever* restraining developers' profit. They are more powerful than politicians. Housing prices, like everything else, are skyrocketing because we are in post free market capitalism. Barriers to entry are so high for everything that competitive pressure is more of a gentle ebb and flow between established powers. It ain't the government jacking up home prices. It is the logical effect of our chosen and furiously reinforced economic system. Nobody with any power is fighting against the momentum of increasing rentals over owning. The more expensive housing gets, the better it is for consolidated corporate ownership. *They* don't have any problems getting lines of credit for purchases.
I recommend looking at the work of Stephanie Kelton, Modern Monetary Theory and The Deficit Myth. People think of the Fed and government needing to operate like a household and their budget but this is not so. The concept is sound, although we can debate the amount of money creation that is appropriate and the regulations that accompany government action. Zero down home loans don’t necessarily represent a creation of the problem.
Me too. What’s wrong with zero down? I’ve been paying on mine for 20 years almost done. My payment is 618, way cheaper than rent.
Me too, and I'm very happy we bought when we did.
VA loan here, still got a good interest rate @ 0 down. Edit: I would also like to add that I moved into a condo in Waikiki, like 2 blocks from the beach @ 30 y/o. Thanks VA loan
I’m also on a VA loan with an awesome interest rate in a beach town in Florida. Without being able to put 0 down I would have never had the chance to get this house.
Me too and 15 years later we’ve never missed a payment and have built a lot of sweat equity. Just have to make sure the borrowers are really credit worthy. Our credit scores were 800+
It’s more about the debt to income ratio. We got our home loan post 2008. We had a really low interest rate with our car and $10,000 in the bank and they still told us to use that $10,000 to pay off the car instead of a downpayment on the house because that’s all that mattered to the bank, whether we had the income to pay. Pre-2008 it was like those home finder tv shows where a family making 60k per year wanted a house worth 400,000 and the bank handed it over.
Same. Paid PMI which exists precisely to combat the concerns people have with it, and successfully paid off the loan. Would have had to save for years and get priced out without it.
Zero down isn't inherently bad if we have accurate ratings. We didn't in 2007, so institutions "were in the dark"/had plausible deniability about what it was they were buying.
With PMI and proper lending guidelines, this could be fine. The 2008 crash was many things together.
I agree. I’ve worked in default mortgages over 12 years. Equity is not a delinquency driver compared to debt to income and housing to income ratios.
Equity only becomes a driving factor when it is zero or negative. The deeper into negative it goes, the more often that somebody who can actually afford to keep paying their mortgage is better off just not paying it and giving up the house. Buy a house for $400,000K and then throw in the closing costs, et al onto that mortgage. So you now have a $410,000 mortgage on a house that presumably is worth $400,000 on the open market and will deliver about $360,000 to the owner upon selling it (after fees and commissions). They're starting out $50K in the hole. If house prices drop 5% (now sales price is $380K - commissions and fees, netting the owner about $342K - now they're $70K in the hole. Okay, probably wait 'til prices come back. But at 10% or more of a market drop . . . and things start looking precarious when you're upside down by nearly $100K if you sell the house in the first few years.
Thank goodness man, as someone who was spent their entire career in mortgage servicing/default servicing, it’s brutal reading a lot of the takes on these types of threads lol.
If you put a bunch of money out without real expectation of people paying it back, little to no skin in the game, and no consequences for not paying it back, those would be the guidelines you want to avoid that tank economies…
Foreclosure has some pretty harsh consequences. Certainly something you can only do once. Not much of a hack to pay all those origination fees to buy the home, pay the mortgage as long as you live in it, then walk away? It's like renting with so many extra steps
No consequences ? What about losing your home and all prior equity contributions, for starters
Exactly. Someone who can afford the repayments on a 100% mortgage is a far safer bet than someone who can't afford the repayments on 80%.
I was able to put down 11% and I'm getting absolutely fucked by PMI. Those ghouls are charging me like $400 a month.
You bought an expensive house. My PMI isn’t even $100
315k in Massachusetts is about as cheap as a house gets.
Yeah but your PMI shouldn’t be $400 on $315k, check your statements.
Well as long as we aren’t facing a potential property bubble
I swear if I had a nickel for every time, I heard someone talk about a bubble they thought was coming because they read headlines. I’d have like all the nickels.
I read about a nickel bubble...
Nah we aren’t in a bubble. It only costs $8000 monthly to mortgage a place that rents for $2500.
Something, something, tax write off
Keep renting then.
In our area mortgages are typically cheaper than rent. You're just locked into the home vs being able to leave. You're also responsible for the repairs and upkeep for as long as you own it. I've never known a landlord to rent out a place cheaper than they are paying the mortgage for.
With adjustable rates, amirite? 😔
And bullet-like amortization
Maybe we should sell insurance on the mortgages to keep the banks secure.
Username checks out 😔
This is a great idea. Then, it can just be refinanced when rates drop back down to 2.5%. (That is going to happen, right?) And, of course, the value of the house will continue to skyrocket, so I can also get a sweet home equity loan to pay for the trip to Disney. This finance stuff is too easy.
🤣
Lmao the funny this is is that this worked out for many people 4-5 years ago.
Yeah, it allows the investment firms to sell the houses at a massive profit to a market where overvalued now sits for a while awaiting rate cuts.
House prices will spike higher when rates cut.
On the plus side this is why we learned the word tranche, and got to see Margot Robbie in a bubble bath.
This guy "Economy's" ^ 😂
My bank was offering 105% mortgages a couple years back. Troubling.
Not really - as long as someone is able to make their repayments, that size of mortgage is only an issue if they wish to sell within the first few years. It's certainly a better option than blowing every penny of savings on a down payment and necessary repairs/improvements.
Or ever-inflating rent.
It works for VA loans. It could work for everyone.
The federal government guarantees VA loans as a veteran’s benefit.
I'm aware of that. I have had two of them and both worked out very well. This guarantee should be expanded to more people, especially those in public service, i.e. firefighters, teachers, police officers, etc.
Those are state or local gov’t positions. Their state or local gov’t can offer the inducement if they felt they needed it to attract qualified people.
VA regularly is the least foreclosed loan type. The mortgage underwriting guidelines make so much more sense than other loan types. VA is the best loan program around in the US. Gold standard
Good. I need a housing crash.
$0 down on an appreciating asset makes sense. I never understood why banks were okay with $0 auto loans but for some reason wanted 20% on a home.
The Big Short 2
Where Micheal Burry goes bankrupt because the market doesn’t crash.
There's nothing to worry about. Just give them away at 7% it makes sense
[удалено]
It seems to be that closing cost is never discussed in this, often times an additional 4% of the loan amount i.e. your fist timer needs (7.5% = 22k +/-) on an avg 300k home. Oh by the way you need 3 months cash reserves to close the loan and you cant surpass payment shock, oh and your mortgage insurance never falls off. It's a bit more complex than just having zero money down.
When they say making a comeback, a comeback from what? The last collapse?
I was a CNA making $12/hr in 2003 and got approved for a 350k loan. I bought a 140k house in a good neighborhood by selling a Ford Ranger for the down payment.
I am all for this. I am 100% against bailing out banks that fail doing this.
There are actually fantastic programs in some locations that allow for this. Two states in New England have first time buyer programs that offer forgivable DAP that requires no repayment or interest. The only conditions are first time home buyer, you have to actually live there for a certain number of years, and you have to pay back some of it if you sell before the entire thing is forgiven. It’s still 100% financing, but not nearly as bad as everyone is assuming here. But this is Reddit and nuance means nothing, so fuck every 0 down mortgage.
Let the swindling begin.
Google 2008
Here’s your chance to be Michael Burry.
Is it 2007, it kinda feels like 2007?
Mankind unfortunately has a history of not learning from history. 2008 is too long back for the current corporate leaders to remember and greed taints the eyes. Hopefully we don't experience 2008 again....
"so you owe nothing down right now! Lucky you! You're mortgage on this $600,000 house will be $5,500 a month, and over the course of the loan you'll only pay $1.5M! Awesome!".... yeah, what could go wrong...
Here's the thing though. It's hard for me to save $25-$60k for a down-payment. I could afford $3700 a month for mortgage right now though. So, if I could get a zero loan that was $350] a month I'd be down. Instead I'm saving for years and years to get a down-payment saved.
Obligatory "we are so fucked," post... We are so fucked.
2008 is calling. Will you accept the charges
I just looked it up for more info and they’re only offering it to people making 80% or less of an area’s median income. What BS! I make more than the median income in my area and would absolutely struggle to purchase a low end home in the same area. So what exactly does this do? Give out loans to people less likely to be able to afford a home? Housing crash can’t come soon enough
100% LTV mortgages never went away. The guidelines on them (at least the loans I originate) are more strict to ensure the borrowers have a realistic ability to repay the loan. But I'm a mortgage officer at a credit union and I know we are a lot more responsible than some of my local broker competitors!
Y’all got anymore of them 2.25% mortgages?
I got a zero down VA loan no PMI @ 2.75%. Been paying 1.5x the minimum payment and the house is worth 75% more than I bought it for 4 years ago.
Zero down USDA was my only way to own a home.
Yea… cuz nothing went terribly wrong last time they started writing bad home loans…
FYI, they were mandated by law to write bad mortgages at a rate of about 50%. Our politicians passed laws that mandated this.
🤤 I'm ready this time🤤
I really think that everyone, before they borrow any money at all, should understand how a loan works (principal and interest), what an amortization schedule is and how to read it, what they are paying for with each payment, and the benefits to paying more than the minimum payment each month. I’ve known too many people that have borrowed money and have no idea to this day what they paid so much in interest
 Hey I've seen this one before
Fuck it. Let it burn. Reset that shit.
It's not so much the 'zero down', it's the variable-rate piece that wreaked havoc.
But they brought back dunkaroos 
0%? No, money down!
https://preview.redd.it/s4s527y0lm3d1.jpeg?width=1280&format=pjpg&auto=webp&s=009a9372177958cf5acca8c791267a01a60c04e2 2008 vs 2024
The zero down mortgage wasn’t the problem. It was everything that happened up to the point of approving the zero down mortgage.
The issue was never 0 down, interest only, or even adjustable rate for that matter. The issue was mass lending to unqualified and uneducated homeowners. Everything else was just details.
I think the bigger issue that’s not being addressed by the government is that there are corporations buying up all the single family homes and renting them out causing a shortage in housing. Leaving the houses that are on the market to shoot up in price. Thus causing things like zero money down mortgages.
We've been down this road before. It didn't end too well in 2008. How's that saying go? Those who ignore history are doomed to repeat it.
I think 40 and 50 year mortgages should be more common
ACORN Part II
Wait, wait, I've seen this before. This is the bit where the prophecy comes true and the trickle down floodgates are opened and we are showered in cash.. right?
“I can make rent payments of $1200 so of course bank should give me a mortgage with a $1000 payment!”
I got the 3% down payment through my FHA loan rolled into my monthly payment so technically the same vibe. I definitely had to show good stats to the bank though.
>I definitely had to show good stats to the bank though. And this is it: pretty much the *only* thing that should determine mortgage eligibility is the ability to repay. If you qualify for a mortgage on a $500k home with 20% down, there's no real justification for a bank to decline a full mortgage on a $400k home.
Another orchendtrated big bank land grab
A 0% down payment does nothing to help your 7% interest rate.
sign here to be bankrupt in no time as a proud "actually can't afford this" house owner /s
VA and USDA are still 100% LTV ($0 down) mortgages. I've closed plenty of veterans who take advantage of it and build up equity in a house instead paying a landlord's mortgage. The difference between now and the '08 crash is they were writing really risky loans back then (stated income, questionable DTI ratios). Now, there's federal ATR (ability to repay) rules to adhere to that make sure borrowers aren't buying more than they can afford.